Freddie Mac economists remain upbeat about the housing market outlook for the rest of 2016 and 2017. According to their April Outlook Report housing will continue its forward momentum and be a driver of economic growth.

"We've revised down our forecast for economic growth to reflect the recent data for the first quarter, but our outlook for the balance of the year remains modestly optimistic for the economy,” says Sean Becketti, Freddie Mac’s chief economist. “However, we maintain our positive view on housing. In fact, the declines in long-term interest rates that accompanied much of the recent news should increase mortgage market activity, particularly refinance."

Economists predict that the labor market will stay strong, unemployment is projected to drop back below 5%, and wage gains should exceed the rate of inflation. They expect mortgage loans to rise by $50 billion in 2016 as a result of the low mortgage rates that are expected to stick around for a while.

The 30-year fixed-rate mortgage averaged 3.7% in the first quarter of this year, and economists are projecting that rates will average around 4% in 2016. They also predict that home prices will rise by 4.8% in 2016 and another 3.5% in 2017, leading to more equity for home owners.